The UK internet service provider Freeserve is considering recalculating staff share options because a prolonged slump in the company's share price has made the options virtually worthless, The Times newspaper reported.

Several high-profile US companies including Microsoft, Amazon and Sprint have recently reset their share options schemes in light of sharp falls in tech stock prices.

But if Freeserve goes ahead with the move, it would be the first time a major UK firm had done it.

Shares in the ISP were floated at 150 pence each last July but dropped to 155p this week, down from a peak of 921p in February.

Senior company executives, including chief executive John Pluthero, can exercise their options to buy shares at 150p but many other employees hold options with an exercise price of more than 350p a share, The Times said.

New issue postponed

The newspaper said a planned new options issue in September had been postponed while Freeserve worked out what to do.

Analysts said institutional investors might welcome a rebasing of options if the company could show a positive outlook for subscriber and revenue growth.

However, they warned the market might view such a move as a sign that management did not expect the company's share price to appreciate significantly in the near future.

Freeserve shares put on 9.5p to 164.5p on Tuesday after the company agreed a business partnership and advertising deal with UK retail chain Kingfisher.

Kingfisher on Tuesday said it was paying £15.7m for 85% of Streets Online, the internet CD and books retailer in which Freeserve has a 14% stake.